Proposed Rules Title 1

TITLE 22. EXAMINING BOARDS

Part 23. TEXAS REAL ESTATE COMMISSION

Chapter 533. PRACTICE AND PROCEDURE

22 TAC §§533.1 - 533.8, 533.20, 533.30 - 533.37, 533.40

The Texas Real Estate Commission (TREC) adopts on an emergency basis new rules to Chapter 533 concerning Practice and Procedure. The new rules are as follows: §533.1 concerning definitions of terms found in the chapter; §533.2 concerning the purpose and scope of the chapter; §533.3 concerning filling and notice procedures in a contested case; §533.4 concerning failure to answer, failure to attend a hearing and default; §533.5 concerning the adjudicative hearing record; §533.36 concerning filing of exceptions and replies; §533.7 concerning proposals for decisions; §533.8 concerning final orders, motions for rehearing, and emergency orders; §533.20 concerning informal proceedings; §533.30 concerning alternative dispute resolution (ADR) policy; §533.31 concerning referral of contested matters for alternative dispute resolution procedures; §533.32 concerning appointment of a mediator; §533.33 concerning qualifications of mediators; §533.34 concerning commencement of alternative dispute resolution; §533.35 concerning stipulations; §533.36 concerning agreements; §533.37 concerning confidentiality and §533.40 concerning negotiated rulemaking.

The new rules are adopted on an emergency basis to comply with new legislation that transfers the functions of TREC's administrative law judge to the State Office of Administrative Hearings and provides for a negotiated rulemaking process. The legislation included revisions to Texas Occupations Code Chapters 1101 and 1102 enacted during the 80th Legislative Session, Regular Session, by Senate Bill 914 and House Bill 1530. The effective date of SB 914 and HB 1530 is September 1, 2007. The adoption of the new rules permits TREC to comply with the effective date required by both bills.

The emergency rules are adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

The statutes affected by this emergency adoption are Texas Occupations Code, Chapters 1101 and 1102, and Senate Bill 914, and House Bill 1530, 80th Legislature, R.S. No other statute, code or article is affected by the adopted amendments.

§533.1.Definitions.

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

(1) ADR--Alternative dispute resolution

(2) ADR Administrator--The trained coordinator in the commission office designated by the commission to coordinate and oversee the ADR procedures which may include conducting mediations. The ADR Administrator shall serve as a resource for ADR training and shall collect data concerning the effectiveness of the ADR procedures.

(3) Administrator--The Administrator of the Texas Real Estate Commission.

(4) ALJ--Administrative law judge employed by the State Office of Administrative Hearings.

(5) Alternative Dispute Resolution (ADR) Procedures--Alternatives to judicial forums or administrative agency contested case proceedings for the voluntary settlement of contested matters through the facilitation of an impartial third-party.

(6) APA--The Administrative Procedure Act (Tex. Gov't. Code, Chapter 2001).

(7) Applicant--Any person seeking a license, certificate, registration, approval or permit from the commission

(8) Commission--Texas Real Estate Commission

(9) Complainant--Any person who has filed a complaint with the commission against any person whose activities are subject to the jurisdiction of the commission.

(10) Contested case or proceeding--A proceeding in which the legal rights, duties, or privileges of a party are to be determined by the commission and/or administrator after an opportunity for adjudicative hearing.

(11) Final decision maker--The commission and/or the administrator, both of whom are authorized to render the final decision in a contested case.

(12) Judge--Administrative law judge employed by the State Office of Administrative Hearings.

(13) License--The whole or part of any commission registration, license, certificate, approval, permit, or similar form of permission required or permitted by law.

(14) Mediator--The commission employee or other state employee who presides over ADR proceedings regardless of which ADR method is utilized.

(15) Party--A person admitted to participate in a case before the final decision maker.

(16) Person--Any individual, partnership, corporation, or other legal entity, including a state agency or governmental subdivision.

(17) Pleading--A written document submitted by a party, or a person seeking to participate in a case as a party, which requests procedural or substantive relief, makes claims, alleges facts, makes legal argument, or otherwise addresses matters involved in the case.

(18) Private Mediator--A person in the mediation profession who is not a Texas State employee and who has met all the qualifications prescribed by Texas law for mediators.

(19) Respondent--Any person, licensed or unlicensed, who has been charged with violating a law establishing a regulatory program administered by the commission or a rule or order issued by the commission.

(20) Rule--Any commission statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the commission and is filed with the Texas Register.

(21) SOAH--State Office of Administrative Hearings.

§533.2.Purpose and Scope.

(a) Purpose. Unless otherwise provided by statute or by the provisions of this subchapter, this subchapter will govern the institution and final conclusion of proceedings followed in handling all adjudicative matters under the APA. Once the commission files the Request to Docket Case form with SOAH, SOAH acquires jurisdiction over a contested case, and a hearing conducted by SOAH on a contested case proceeding pending before the commission is governed by SOAH's rules of procedure. In the case of a conflict with rules in this subchapter, SOAH's rules, 1 TAC Chapter 155, control after the filing of the Request to Docket Case form and until after final amendments or corrections to the proposal for decision.

(b) Scope. These rules govern the institution, conduct, and determination of adjudicative proceedings required or permitted by law, whether instituted by the commission or by the filing of an application, claim, complaint, or any other pleading. These rules shall not be construed so as to enlarge, diminish, modify, or otherwise alter the jurisdiction, powers, or authority of the commission, the administrator, or the substantive rights of any person or agency.

§533.3.Filing and Notice.

(a) The commission shall provide notice to all parties in accordance with the APA §2001.052, Chapters 1101 and 1102, Texas Occupations Code, and the following:

(1) If, after investigation of a possible violation and the facts surrounding that possible violation, the commission determines that a violation has occurred, the commission shall issue a written Notice of Alleged Violation.

(2) The Notice of Alleged Violation shall include:

(A) a brief summary of the alleged violation(s);

(B) a statement of the amount of the penalty and/or sanction recommended; and

(3) The commission shall base the recommendation on the factors set forth in Chapter 533.

(b) Not later than the 20th day after the date on which the notice is received, the Respondent may accept the determination of the commission, including the recommended penalty and/or sanction, or make a written request for a hearing on that determination.

(c) Upon receipt of a written request for hearing, the commission shall submit a Request for Docket Case form to SOAH accompanied by legible copies of all pertinent documents, including but not limited to the Notice of Hearing or other document describing the agency action giving rise to a contested case. In accordance with 1 TAC §155.9, the commission shall request one or more of the following actions on the Request to Docket Case form:

(1) Setting of hearing;

(2) Assignment of an administrative law judge; and/or

(3) Setting of alternative dispute resolution proceeding, including but not limited to mediated settlement conference, mediation, or arbitration.

(d) The original of all pleadings and other documents requesting action or relief in a contested case, shall be filed with SOAH once it acquires jurisdiction. Pleadings, other documents, and service to SOAH shall be directed to: Docketing Division, State Office of Administrative Hearings, 300 West 15th Street, Room 504, P.O. Box 13025, Austin, Texas 78711-3025. The time and date of filing shall be determined by the file stamp affixed by SOAH. Unless otherwise ordered by the judge, only the original and no additional copies of any pleading or document shall be filed. Unless otherwise provided by law, after a proposal for decision has been issued, originals of documents requesting relief, such as exceptions to the proposal for decision or requests to reopen the hearing, shall be filed with the commission's administrator and/or commission as well as the commission's Enforcement Division, P.O. Box 12188, Austin, Texas 78711; 1101 Camino La Costa, Austin Texas; or by facsimile mail at (512) 465-3962 if the documents contain 20 or fewer pages including exhibits. Filings may be made until 5:00 p.m. on business days. Copies shall be filed with SOAH.

(e) If a real estate salesperson is a respondent, the commission also will notify the salesperson's sponsoring broker of the hearing. If an apprentice inspector or real estate inspector is a respondent, the commission also will notify the sponsoring professional inspector of the hearing.

(f) Any document served upon a party is prima facie evidence of receipt if it is directed to the party's last known complete, correct address as shown by the commission's records. This presumption is rebuttable. Failure to claim properly addressed certified or registered mail will not support a finding of nondelivery.

§533.4.Failure to Answer, Failure to Attend Hearing and Default.

(a) If, within twenty days after receiving a Notice of Alleged Violation, the Respondent fails to accept the commission's determination and recommended administrative penalty and/or sanction, or fails to make a written request for a hearing on the determination, the commission shall enter a default order against the Respondent, containing findings of fact and conclusions of law.

(b) After receiving a notice proposing disapproval of an application an Applicant may request a hearing in writing within twenty days of receipt of the notice or forfeit the right to a hearing unless otherwise provided by applicable law.

(c) The commission may delegate to the administrator the commission's authority to act under Texas Occupations Code §1101.704(b) and subsection (a) of this section.

(d) 1 TAC §155.55 (SOAH rules) applies where a Respondent fails to appear on the day and time set for administrative hearing. In that case, the commission's staff may move either for dismissal of the case from SOAH's docket or for the issuance of a default proposal for decision by the judge.

§533.5.The Adjudicative Hearing Record.

(a) On the written request by a party to a case or on request of the judge, a written transcript of all or part of the proceedings shall be prepared. The cost of the transcript is borne by the requesting party. This section does not preclude the parties from agreeing to share the costs associated with the preparation of a transcript. If only the judge requests a transcript, costs will be assessed to the Respondent(s) or Applicant(s), as appropriate.

(b) Any party who needs a certified language interpreter for presentation of its case shall be responsible for requesting the services of an interpreter. The requesting party shall be responsible for making arrangements with a certified language interpreter once a request is made. The cost of the certified language interpreter shall be borne by the party requiring the interpreter's services.

§533.6.Filing of Exceptions and Replies.

(a) Any party of record who is adversely affected by the proposal for decision of the judge shall have the opportunity to file exceptions and a brief to the proposal for decision within 15 days after the date of service of the proposal for decision.

(b) A reply to the exceptions may be filed by the other party within 15 days of the filing of the exceptions.

(c) Exceptions and replies shall be filed with the judge with copies served on the opposing party. The proposal for decision may be amended by the judge pursuant to the exceptions, replies, or briefs submitted by the parties without again being served on the parties.

§533.7.Proposals for Decision.

(a) Proposed decisions shall be brought before the commission for final decision.

(b) The proposal for decision may be acted on by the commission after the expiration of 10 days after the filing of replies to exceptions to the proposal for decision or upon the day following the day exceptions or replies to exceptions are due if no such exceptions or replies are filed.

(c) It is the policy of the commission to change a finding of fact or conclusion of law in a proposal for decision or to vacate or modify the proposed order of a judge when, the commission determines:

(1) that the judge did not properly apply or interpret applicable law, agency rules, written policies provided by staff or prior administrative decisions;

(2) that a prior administrative decision on which the judge relied is incorrect or should be changed; or

(3) that a technical error in a finding of fact should be changed.

§533.8.Final Orders, Motions for Rehearing, and Emergency Orders.

(a) Unless otherwise authorized under §533.13(f) of this chapter, a final order in a contested case shall be in writing and shall be signed by the presiding officer of the commission. Final orders shall include findings of fact and conclusions of law separately stated.

(b) If the commission modifies, amends, or changes a proposal for decision, the order shall reflect the commissions changes as stated in the record of the meeting and state the specific reason and legal basis for the changes made according to §533.7(c) of this chapter.

(c) A party notified by mail of a final decision or order shall be presumed to have been notified on the third day after the date on which the notice is mailed.

(d) The timely filing of a motion for rehearing is a prerequisite to appeal.

(e) Motions for rehearing are controlled by Texas Government Code §2001.145 and §2001.146.

(f) If the commission and/or the administrator find that an imminent peril to the public health, safety, or welfare requires immediate effect of a final decision or order, that finding shall be recited in the decision or order as well as the fact that the decision or order is final and effective on the date signed, in which event the decision or order is final and appealable on the date signed and no motion for rehearing is required as a prerequisite for appeal.

(g) A petition for judicial review must be filed in a District Court of Travis County Texas within 30 days after the order is final and appealable, as provided by Government Code, Title 10, Subtitle A, Chapter 2001. A party filing a petition for judicial review must also comply with the requirements of Occupations Code, §1101.707.

(h) If, after judicial review, the penalty is reduced or not assessed, the administrator shall remit to the person charged the appropriate amount, plus accrued interest if the penalty has been paid, or shall execute a release of the bond if a supersedeas bond has been posted. The accrued interest on amounts remitted by the administrator under this subsection shall be paid at a rate equal to the rate charged on loans to depository institutions by the New York Federal Reserve Bank, and shall be paid for the period beginning on the date that the assessed penalty is paid to the commission and ending on the date the penalty is remitted.

§533.20.Informal Proceedings.

(a) Informal disposition of any contested case involving a licensee or an applicant for licensure may be made through an informal conference pursuant to Occupations Code §1101.660.

(b) The commission and the respondent or applicant may enter into an agreed order without first engaging in an informal conference under this subchapter.

(c) A licensee or applicant may request an informal conference; however, the decision to hold a conference shall be made by the Director of Enforcement.

(d) An informal conference shall be voluntary and shall not be a prerequisite to a formal hearing.

(e) An informal conference may be conducted in person, or by electronic, telephonic, or written communication.

(f) The Director of Enforcement or the director's designee shall decide upon the time, date and place of the informal conference, and provide written notice to the licensee or applicant. Notice shall be provided by certified mail no less than ten days prior to the date of the conference to the permanent mailing address of the licensee or applicant. The ten days shall begin on the date of mailing. The licensee or applicant may waive the ten-day notice requirement.

(g) A copy of the commission's rules concerning informal conferences shall be enclosed with the notice of the informal conference. The notice shall inform the licensee or applicant of the following:

(1) that the licensee or applicant may be represented by legal counsel;

(2) that the licensee or applicant may offer documentary evidence as may be appropriate;

(3) that at least one public member of the commission shall be present;

(4) that two staff members, including the staff attorney assigned to the case, with experience in the regulatory area that is the subject of the proceedings shall be present;

(5) that the licensee's or applicant's attendance and participation is voluntary; and

(6) that the complainant involved in the alleged violations may be present.

(h) The notice of the informal conference shall be sent to the complainant at his or her last known address. The complainant shall be informed that he or she may appear in person or may submit a written statement for consideration at the informal conference.

(i) The conference shall be informal and need not follow the procedures established in this chapter for contested cases and formal hearings.

(j) The licensee or applicant, the licensee's or applicant's attorney, the commission member, and the staff attorney may question the respondent or complainant, make relevant statements, present statements of persons not in attendance, and present such other evidence as may be appropriate.

(k) The staff attorney assigned to the case shall attend each informal conference. The commission member or other staff member may call upon the attorney at any time for assistance in the informal conference.

(l) No formal record of the proceedings of the informal conference shall be made or maintained.

(m) The complainant may be excluded from the informal conference except during the complainant's oral presentation. The licensee or applicant, the licensee's or applicant's attorney, and commission staff may remain for all portions of the informal conference, except for consultation between the commission member and commission staff.

(n) The complainant shall not be considered a party in the informal conference but shall be given the opportunity to be heard if the complainant attends. Any written statement submitted by the complainant shall be reviewed at the conference.

(o) At the conclusion of the informal conference, the commission member or staff attorney may propose an informal settlement of the contested case. The proposed settlement may include administrative penalties or any disciplinary action authorized by the Act. The commission member or staff attorney may also recommend that no further action be taken.

(p) The licensee or applicant may either accept or reject the settlement recommendations at the conference. If the recommendations are accepted, an agreed order shall be prepared by the staff attorney and forwarded to the licensee or applicant. The order shall contain agreed findings of fact and conclusions of law. The licensee or applicant shall execute the order and return the signed order to the commission within ten days of his or her receipt of the proposed agreed order. If the licensee or applicant fails to return the signed order within the stated time period, the inaction shall constitute rejection of the settlement recommendation.

(q) If the licensee or applicant rejects the proposed settlement, the matter shall be referred to the Director of Enforcement for appropriate action.

(r) If the licensee or applicant signs and accepts the recommendation, the agreed order shall be submitted to the administrator for approval.

(s) If the administrator does not approve a proposed agreed order, the licensee or applicant shall be so informed and the matter shall be referred to the Director of Enforcement for other appropriate action.

(t) A licensee's opportunity for an informal conference under this subchapter shall satisfy the requirement of the APA, §2001.054(c).

(u) The commission may order a license holder to pay a refund to a consumer as provided in an agreement resulting from an informal conference instead of or in addition to imposing an administrative penalty. The amount of a refund ordered as provided in an agreement resulting from an informal conference may not exceed the amount the consumer paid to the license holder for a service regulated by the Act and this title. The commission may not require payment of other damages or estimate harm in a refund order.

§533.30.Alternative Dispute Resolution Policy.

It is the commission's policy to encourage the fair and expeditious resolution of all contested matters through voluntary settlement procedures. The commission is committed to working with all parties to achieve early settlement of contested matters.

§533.31.Referral of Contested Matter for Alternative Dispute Resolution Procedures.

The commission's Director of Enforcement or Human Resources Office, on behalf of the commission, may seek to resolve a contested matter through negotiation or mediation involving all parties and if so, shall refer the matter for mediation in accordance with §60.155.

§533.32.Appointment of Mediator.

(a) For each matter referred for ADR procedures, the ADR Administrator shall mediate or assign another commission mediator unless the parties agree upon the use of another agency's mediator or private mediator. The ADR Administrator may assign a substitute or additional mediator to a proceeding as the ADR Administrator deems necessary.

(b) A private mediator may be hired for commission ADR procedures provided that:

(1) the parties unanimously agree to use a private mediator;

(2) the parties unanimously agree to the selection of the person to serve as the mediator; and

(3) the mediator agrees to be subject to the direction of the commission's ADR Administrator and to all time limits imposed by the Administrator, statute or regulation.

(c) If a private mediator is used, the costs for the services of the mediator shall be apportioned equally among the parties, unless otherwise agreed upon by the parties, and shall be paid directly to the mediator.

(d) All mediators in commission mediation proceedings shall subscribe to the ethical guidelines for mediators adopted by the ADR Section of the State Bar of Texas.

§533.33.Qualifications of Mediators.

(a) A commission mediator will receive at a minimum 40 hours of formal training in ADR procedures through a program approved by the commission's administrator.

(b) SOAH mediators, employees of other agencies who are mediators, and private pro bono mediators, may be assigned to contested matters as needed.

(1) Each mediator shall first have received 40 hours of Texas mediation training as prescribed by Texas law.

(2) Each mediator shall have some expertise in the area of the contested matter.

(3) If the mediator is a SOAH judge, that person will not also sit as the judge for the case if the contested matter goes to public hearing. If the mediator is an employee of the commission and dispute does not settle, that mediator will not have any further contact or involvement concerning the disputed matter.

§533.34. Commencement of ADR.

(a) The commission encourages resolution of disputes at any time; however, ADR procedures may begin, at the discretion of the Director of Enforcement or the Human Resources Office, anytime after the commission anticipates initiation of an adverse action against an applicant, respondent, or employee. The commission may issue a Notice of Mediation along with a Notice of Alleged Violation or along with a notice of a proposed denial of licensure or opportunity to take an examination. Prior to the submission of a Request for Docket Case form to SOAH, and with agreement of all parties, the ADR Administrator may schedule mediation upon any party's request.

(b) A commission employee, subsequent to appealing a personnel action to the appropriate commission Division Director in accordance with the commission's Personnel Manual and without having obtained satisfaction, may request approval of mediation from the Human Resources Office.

(c) Upon unanimous motion of the parties and at the discretion of the administrative law judge, the provisions of this section may apply to contested case hearings. In such cases, it is within the discretion of the judge to continue the hearing to allow the use of ADR procedures.

§533.35.Stipulations.

When the ADR procedures do not result in the full settlement of a matter, the parties in conjunction with the mediator, may limit the contested issues through the entry of written stipulations. Such stipulations shall be forwarded or formally presented to the administrative law judge assigned to conduct the contested case hearing on the merits and shall be made part of the hearing record.

§533.36.Agreements.

All agreements between or among parties that are reached as a result of ADR must be committed to writing and will have the same force and effect as a written contract.

§533.37.Confidentiality.

(a) Except as provided in subsections (c) and (d) of this section, a communication relating to the subject matter made by a participant in an ADR procedure, whether before or after the institution of formal ADR proceedings, is confidential, is not subject to disclosure, and may not be used as evidence in any further proceeding.

(b) Any notes or record made of an ADR procedure are confidential, and participants, including the mediator, may not be required to testify in any proceedings relating to or arising out of the matter in dispute or be subject to process requiring disclosure of confidential information or data relating to or arising out of the matter in dispute.

(c) An oral communication or written material used in or made a part of an ADR procedure is admissible or discoverable only if it is admissible or discoverable independent of the procedure.

(d) If this section conflicts with other legal requirements for disclosure of communications or materials, the issue of confidentiality may be presented to the judge to determine, in camera, whether the facts, circumstances, and context of the communications or materials sought to be disclosed warrant a protective order or whether the communications or materials are subject to disclosure.

(e) All communications in the mediation between parties and between each party and the mediator are confidential. No shared information will be given to the other party unless the party sharing the information explicitly gives the mediator permission to do so. Material provided to the mediator will not be provided to other parties and will not be filed or become part of the contested case record. All notes taken during the mediation conference will be destroyed at the end of the process.

§533.40.Negotiated Rulemaking.

(a) It is the commission's policy to employ negotiated rulemaking procedures when appropriate. When the commission is of the opinion that proposed rules are likely to be complex, or controversial, or to affect disparate groups, negotiated rulemaking will be considered.

(b) When negotiated rulemaking is to be considered, the commission will appoint a convener to assist it in determining whether it is advisable to proceed. The convener shall have the duties described in Chapter 2008, Government Code, and shall make a recommendation to the administrator to proceed or to defer negotiated rulemaking. The recommendation shall be made after the convener, at a minimum, has considered all of the items enumerated in Government Code, §2008.052(c).

(c) Upon the convener's recommendation to proceed, the commission shall initiate negotiated rulemaking according to the provisions of Chapter 2008, Government Code.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703569

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

22 TAC §§533.31 - 533.39

(Editor's note: The text of the following sections adopted for repeal on an emergency basis will not be published. The sections may be examined in the offices of the Texas Real Estate Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Real Estate Commission (TREC) adopts on an emergency basis the repeal of existing provisions in Chapter 533 concerning Practice and Procedure, specifically §§533.31 - 533.39. The repeal is adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapters 1101 and 1102 enacted during the 80th Legislative Session, Regular Session, by Senate Bill 914 and House Bill 1530. The effective date of SB 914 and HB 1530 is September 1, 2007. New rules are being simultaneously adopted on an emergency basis to replace the existing rules. The repeal of the rules are necessary because they conflict with the new rules that address the procedure for taking disciplinary hearings to the State Office of Administrative Hearings as provided by SB 914. The repeal of the existing rules and the adoption of the new rules permit TREC to comply with the effective date required by both bills.

§533.31.Procedures for Rulemaking and Contested Cases.

§533.32.Filing of Documents.

§533.33.Computation of Time.

§533.34.Disapproval of an Application for a License or Registration.

§533.35.Revocation or Other Action against a License or Registration.

§533.36.Hearings before Presiding Officer or the Members of the Commission.

§533.37.Limitations on Number of Witnesses.

§533.38.Motions for Rehearing, Modification of Order, or Probation.

§533.39.Judicial Review.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703567

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Chapter 535. GENERAL PROVISIONS

Subchapter D. THE COMMISSION

22 TAC §535.42

The Texas Real Estate Commission (TREC) adopts on an emergency basis revisions to §535.42 concerning Jurisdiction and Authority. The amendment is adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapters 1101 and 1102 enacted during the 80th Legislative Session, Regular Session, by Senate Bill 914 and House Bill 1530. The effective date of SB 914 and HB 1530 is September 1, 2007. The adoption of the amendment permits TREC to comply with the effective date required by both bills. The amendment deletes a reference to an employee of TREC conducting contested case hearings as SB 914 provides that the State Office of Administrative Hearings will conduct such hearings.

The emergency amendment to the rule is adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

§535.42.Jurisdiction and Authority

[ ~~(a)~~ ] The commission does not mediate disputes between or among licensees concerning entitlement to sales commissions or recommend individual licensees to the public.

[ ~~(b)~~ An employee of the commission specifically authorized by it pursuant to Texas Occupations Code, Chapter 1101, (the Act), §1101.151(b)(3), to conduct hearings and render final decisions in contested cases may order issuance of a probationary license under §535.94 of this title (relating to Hearing on Application Disapproval: Probationary Licenses) and may suspend or revoke a license or reprimand or place on probation a licensee for a violation of the Act or a rule of the commission.]

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703570

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Subchapter E. REQUIREMENTS FOR LICENSURE

22 TAC §535.51

The Texas Real Estate Commission (TREC) adopts on an emergency basis amendments to §535.51, concerning General Requirements and adopts by reference four revised forms.

The amendments are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapters 1101 and 1102 enacted during the 80th Legislative, Regular Session, by Senate Bill (SB) 914 and House Bill (HB) 1530. The effective date of SB 914 and HB 1530 is September 1, 2007. The amendments, adopted on an emergency basis, permit TREC to comply with the effective date required by both bills. The amendments, adopted on an emergency basis, also adopt by reference revised forms to reflect late renewal penalties for applicants for salesperson and broker license as SB 914 provides for such late penalties.

The amendment is adopted on an emergency basis under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

The statutes affected by this emergency adoption are Texas Occupations Code, Chapters 1101 and 1102, and Senate Bill 914, and House Bill 1530, 80th Legislature, Regular Session. No other statute, code or article is affected by the emergency adoption.

§535.51.General Requirements.

(a) - (d) (No change.)

(e) The commission adopts by reference the following forms approved by the commission which are published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188:

(1) Application [ ~~Effective June 1, 2004, application~~ ] for a Real Estate Broker License, TREC Form BL-8;

(2) [ ~~Effective September 1, 2004,~~ ] Application for a Real Estate Broker License by a Corporation, TREC Form BLC-5;

(3) Effective September 1, 2007, Application [ ~~Effective September 1, 2004, application~~ ] for Late Renewal of A Real Estate Broker License, TREC Form BLR- 8 [ 7 ];

(4) Effective September 1, 2007, Application for Late Renewal of Real Estate Broker License [ ~~Privileges~~ ] by a Corporation, TREC Form BLRC- 5 [ 4 ];

(5) (No change.)

(6) Effective September 1, 2007, Application for Late Renewal of Real Estate Salesperson License, TREC Form SLR- 9 [ 8 ];

(7) - (9) (No change.)

(10) Effective September 1, 2007, Application for Late Renewal of a Real Estate Broker License by a Limited Liability Company, TREC Form BLRLLC- 4 [ 3 ].

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703571

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Subchapter F. EDUCATION, EXPERIENCE, EDUCATIONAL PROGRAMS, TIME PERIODS AND TYPE OF LICENSE

22 TAC §535.61, §535.63

The Texas Real Estate Commission (TREC) adopts on an emergency basis amendments to §535.61, concerning Examinations and §535.63, concerning Education and Experience Requirements for a License.

The amendments are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapter 1101 enacted during the 80th Legislative, Regular Session, by Senate Bill (SB) 914. The effective date of SB 914 is September 1, 2007. The adoption of the amendment on an emergency basis permits TREC to comply with the effective date required by the bill. The amendments, adopted on an emergency basis, clarify that new Texas Occupations Code §1101.451(f) regarding late renewals does not apply to education and experience waivers authorized by rule under Texas Occupations Code §1101.362.

The amendments are adopted on an emergency basis under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

The statute affected by this emergency adoption is Texas Occupations Code, Chapter 1101, and Senate Bill 914, 80th Legislature, Regular Session. No other statute, code or article is affected by the emergency adoption.

§535.61.Examinations.

(a) - (e) (No change.)

(f) Notwithstanding Texas Occupations Code §1101.451(f), the [ ~~The~~ ] commission shall waive the examination of an applicant for a broker license who has been licensed as a broker in this state no more than two years prior to the filing of the application. The commission shall waive the examination of an applicant for a salesperson license who has been licensed in this state as a broker or salesperson no more than two years prior to the filing of the application.

(g) (No change.)

§535.63.Education and Experience Requirements for a License.

(a) (No change.)

(b) Education and experience requirements for a broker license.

(1) (No change.)

(2) Notwithstanding Texas Occupations Code §1101.451(f), the [ ~~The~~ ] commission may waive education and experience required for a real estate broker license if the applicant satisfies each of the following conditions.

(A) - (C) (No change.)

(3) - (4) (No change.)

(1) (No change.)

(2) Notwithstanding Texas Occupations Code §1101.451(f), the [ ~~The~~ ] commission may waive the education required for a real estate salesperson license if the applicant satisfies each of the following conditions.

(A) - (B) (No change.)

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703572

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Subchapter G. MANDATORY CONTINUING EDUCATION

22 TAC §535.71, §535.72

The Texas Real Estate Commission (TREC) adopts on an emergency basis amendments to §535.71, concerning Mandatory Continuing Education: Approval of Providers, Courses and Instructors and adopts by reference one revised form, and §535.72, concerning Mandatory Continuing Education: Presentation of Courses, Advertising and Records.

The amendments are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapter 1101 enacted during the 80th Legislative, Regular Session, by Senate Bill (SB) 914. The effective date of SB 914 is September 1, 2007. The adoption of the amendment, on an emergency basis, permits TREC to comply with the effective date required by the bill. The amendments, adopted on an emergency basis, provide the procedure by which education providers must ensure compliance with the new statutory requirement which requires that online Mandatory Continuing Education courses may not be completed in less than 24 hours.

§535.71.Mandatory Continuing Education: Approval of Providers, Courses and Instructors.

(a) - (ee) (No change.)

(ff) For a distance learning course, an online course will not be considered complete until credit is awarded by the provider. The [ ~~the~~ ] provider shall award the student credit for the course no earlier than 24 hours after the student starts the course and after the student completes [ ~~upon completion of~~ ] the course requirements for credit . The provider [ ~~and~~ ] shall report the awarding of credit to the commission[ ~~. Course credit must be reported~~ ] either by [ ~~the provider~~ ] filing a completed MCE Form 9- 8 [ 7 ], Alternative Instructional Methods Reporting Form, signed by the student, or submitting the information contained in MCE form 9- 8 [ 7 ] by electronic means acceptable to the commission.

(gg) - (hh) (No change.)

§535.72.Mandatory Continuing Education: Presentation of Courses, Advertising and Records.

(a) (No change.)

(b) Partial credit.

(1) A [ ~~Effective January 1, 2005, a~~ ] provider may, but is not required, to permit a student to claim partial credit for a course if:

(A) the course is approved for elective credit only;

(B) the course is not a distance learning course;

(D) the student, by completing MCE Form 14-0, Individual MCE Partial Credit Request Form, requests credit only for the hours the student completed and the student does not claim credit for an hour that the student did not attend in its entirety except as provided by subsection (c) of this section.

(E) the provider signs the MCE Partial Credit Request Form as evidence that the provider has no reason to believe the amount of credit claimed is inaccurate;

(F) the provider submits the MCE Partial Credit Request Form to the commission within the time required to submit the course completion roster under subsection (a) of this section.

(2) (No change.)

(d) Proof of distance learning course completion. In a distance learning course, the provider shall award the student credit for the course no earlier than 24 hours after the student starts the course and after the student completes [ ~~upon completion of the~~ ] course requirements for credit . The provider [ ~~and~~ ] shall report the awarding of credit to the commission. Course credit must be reported either by the provider filing a completed MCE Form 9- 8 [ 7 ], signed by the student, or submitting the information contained in MCE Form 9- 8 [ 7 ] by electronic means acceptable to the commission. If the provider chooses to use an electronic reporting process, the process must ensure that only students who complete the course are reported to the commission as receiving course credit and that the process does not compromise the security of commission records.

(e) - (o) (No change.)

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703573

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Subchapter I. LICENSES

22 TAC §§535.91, 535.92, 535.94

The Texas Real Estate Commission (TREC) adopts on an emergency basis amendments to §535.91, concerning Renewal Notices, §535.92, concerning Renewal: Time for Filing; Satisfaction of Mandatory Continuing Education Requirements, and §535.94, concerning Hearing on Application Disapproval: Probationary Licenses.

The amendments are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapters 1101 and 1102 enacted during the 80th Legislative, Regular Session, by Senate Bill (SB) 914 and House Bill (HB) 1530. The effective date of SB 914 and HB 1530 is September 1, 2007. The adoption of the amendments, on an emergency basis, to the rules permits TREC to comply with the effective date required by both bills. The amendments, adopted on an emergency basis, clarify a new provision in Chapter 1101 that permits a 3-hour legislative exemption for mandatory continuing education and delete a provision regarding contested case hearings held by TREC.

The statutes affected by this emergency adoption are Texas Occupations Code, Chapters 1101 and 1102, and Senate Bill 914 and House Bill 1530, 80th Legislature, Regular Session. No other statute, code or article is affected by the emergency adoption.

§535.91.Renewal Notices.

(a) (No change.)

(b) Except [ ~~On or after January 1, 2005 and except~~ ] as authorized by §535.92 of this chapter, for the renewal [ ~~next and all subsequent renewals~~ ] of a license on active status that is not subject to the annual education requirements of §1101.454 of the Act, the license holder must attend during the term of the current license, at least two Commission-developed legal courses consisting of a three-hour legal update course and a three-hour legal ethics course to comply with the six legal hours of mandatory continuing education required by §1101.455 of the Act. The remaining nine hours required by §1101.455 of the Act may consist of elective credit courses registered with the commission under subchapter G of this chapter.

§535.92.Renewal: Time for Filing; Satisfaction of Mandatory Continuing Education Requirements.

(a) - (j) (No change.)

(k) A [ ~~Effective January 1, 2005, a~~ ] course taken by a licensee to obtain any of the following professional designations, or any other real estate related professional designation course deemed worthy by the commission, may be approved on an individual basis for MCE elective credit if the licensee files for credit for the course using MCE Form 15-0 Individual MCE Elective Credit Request for Professional Designation Course and provides the Commission with a copy of the course completion certificate.

(1) - (9) (No change.)

(l) Effective September 1, 2007, a member of the Texas Legislature who is a licensee need only take three (3) hours in legal ethics to the satisfy the legal mandatory continuing education requirements. To obtain an exemption, the licensee must be a current member of the Legislature.

(m) [ ~~(l)~~ ] If a licensee is unable to renew a license on the commission's Internet website, the licensee may renew an unexpired license by obtaining a renewal application form from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 and complying with the requirements of this section and §535.91 of this chapter.

§535.94.Hearing on Application Disapproval: Probationary Licenses.

(a) (No change.)

(b) If the commission or a SOAH administrative law judge [ ~~an employee of the commission authorized by it to conduct hearings and render final decisions in contested cases~~ ] determines that issuance of a probationary license is appropriate, the order entered with regard to the application must set forth the terms and conditions for the probationary license. Terms and conditions for a probationary license may include any of the following:

(1) - (6) (No change.)

[(c) The commission or an employee of the commission authorized to render final decisions in contested cases may, after notice and hearing as provided in §533.17 of this title (relating to Contested Case: Notice of Hearing) and Administrative Procedure Act, Texas Government Code, §§2001.001, et seq. The commission shall advise licensees in renewal notices and license application forms that default on a loan guaranteed by the TGSLC may prevent a subsequent renewal of a license.]

(c) [ ~~(d)~~ ] Unless the order granting a probationary license specifies otherwise, a probationary licensee may renew the license after the probationary period by filing a renewal application, satisfying applicable education requirements and paying the prescribed renewal fee.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703574

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Subchapter Q. ADMINISTRATIVE PENALTIES

22 TAC §535.191

The Texas Real Estate Commission (TREC) adopts on an emergency basis new Subchapter Q concerning Administrative Penalties, including new §535.191 concerning Schedule of Administrative Penalties. The new subchapter and rule are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapter 1101 enacted during the 80th Legislative Session, Regular Session, by Senate Bill 914. The effective date of SB 914 is September 1, 2007. The adoption of the new subchapter and rule permits TREC to comply with the effective date required by the bills.

The new subchapter and rule provide a schedule of administrative penalties to be assessed for violations of the Chapter 1101, Texas Occupations Code, depending on the severity of the violation and other factors detailed in the rules.

The emergency new subchapter and rule are adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

The statute affected by this emergency adoption is Texas Occupations Code, Chapter 1101 and Senate Bill 914, 80th Legislature, R.S. No other statute, code or article is affected by the adopted amendments.

§535.191.Schedule of Administrative Penalties.

(a) The commission may suspend or revoke a license in addition to assessing the administrative penalties set forth in this section.

(b) The administrative penalties set forth in this section take into consideration all of the criteria listed in §1101.702(b) of the Texas Occupations Code.

(c) An administrative penalty range of $100 - $1,500 per violation per day may be assessed for violations of the following sections of the Texas Occupations and Administrative Codes:

(1) §1101.652(a)(8);

(2) §1101.652(b)(23);

(3) §1101.652(b)(29);

(4) 22 TAC §535.92(f);

(5) 22 TAC §535.91(c); and

(6) 22 TAC §535.144.

(d) An administrative penalty range of $500 - $3,000 per violation per day may be assessed for violations of the following sections of the Texas Occupations Code:

(1) §1101.652(a)(7);

(2) §1101.652(b)(1);

(3) §1101.652(b)(7);

(4) §1101.652(b)(8);

(5) §1101.652(b)(10) - (12);

(6) §1101.652(b)(14);

(7) §1101.652(b)(22);

(8) §1101.652(b)(26) - (28);

(9) §1101.652(b)(30) - (31); and

(10) §1101.654(a).

(e) An administrative penalty range of $1,000 - $5,000 per violation per day may be assessed for violations of the following sections:

(1) §1101.351(a);

(2) §1101.652(a)(3);

(3) §1101.652(a)(9);

(4) §1101.652(b)(2) - (6);

(5) §1101.652(b)(9);

(6) §1101.652(b)(13);

(7) §1101.652(b)(15) - (17);

(8) §1101.652(b)(19) - (21);

(9) §1101.652(b)(24) - (25); and

(10) §1101.652(b)(32).

(f) The commission may assess an additional administrative penalty of up to two times that assessed under subsections (c), (d) and (e) of this section if a person has a history of previous violations.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703575

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Subchapter R. REAL ESTATE INSPECTORS

22 TAC §§535.206, 535.208, 535.210 - 535.212, 535.215, 535.216, 535.224

The Texas Real Estate Commission (TREC) adopts on an emergency basis amendments to §535.206, concerning the Texas Real Estate Inspector Committee, §535.208, concerning Application for a License and adopts by reference new Form REI 8-0, Certificate of Insurance, §535.210, concerning Fees, new §535.211, concerning Professional Liability Insurance, §535.212, concerning Education and Experience Requirements for an Inspector License, §535.215, concerning Inactive Inspector Status, §535.216, concerning Renewal of License or Registration, and §535.224, concerning Practice and Procedure. The amendments and new rules are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapter 1102 enacted during the 80 Legislative Session, Regular Session, by Senate Bill 914 and House Bill 1530. The effective date of SB 914 and HB 1530 is September 1, 2007. The adoption of the emergency revisions and new rule permits TREC to comply with the effective date required by both bills.

The amendments to §535.206 provide the standards for membership on the Real Estate Inspector Advisory Committee, the amendments to §535.208 provide for home inspector applicants to show proof of professional liability insurance, the amendments to §535.210 establish the fee for an educational evaluation of $30, new §535.211 provides for home inspector applicants to show proof of professional liability insurance, the amendments to §535.212 provide that under the alternative licensing method for a real estate and professional inspector license, an applicant must have education and experience in lieu of the traditional requirements under three-tier method of licensure, the amendments to §535.215 provide that a license will revert to inactive status if a licensee is unable to maintain professional liability insurance coverage as required by law, the amendments to §535.216 provide for home inspector renewal applicants to show proof of professional liability insurance, and the amendments to §535.224 delete provisions that authorized the committee to hear disciplinary cases as such cases must, under the new laws, be heard by the State Office of Administrative Hearings.

The statutes affected by this emergency adoption are Texas Occupations Code, Chapters 1101 and 1102 and Senate Bill 914, and House Bill 1530, 80th Legislature, R.S. No other statute, code or article is affected by the adopted amendments.

§535.206.The Texas Real Estate Inspector Committee.

(a) The [ ~~composition and~~ ] functions of the committee are as prescribed by Texas Occupations Code, Chapter 1102.

(b) The committee consists of nine members appointed by the commission as follows:

(1) six members who have been engaged in the practice of real estate inspecting as professional inspectors for at least five years before the member's appointment and who are actively engaged in that practice; and

(2) three members who represent the public, who are not registered, certified, or licensed by an occupational regulatory agency in the real estate industry.

(c) Appointments to the committee shall be made without regard to the race, color, disability, sex, religion, age, or national origin of the appointee.

(d) Members of the committee serve staggered six-year terms, with the terms of two inspector members and one public member expiring on February 1 of each odd-numbered year. Initial appointments may be made for terms shorter than six years in order to establish staggered terms. A member holds office until the member's successor is appointed. If a vacancy occurs during a member's term, the commission shall appoint a person to fill the unexpired term.

(e) At a regular meeting in February of each year, the committee shall elect from its members a presiding officer, assistant presiding officer, and secretary.

(f) The commission may remove a committee member if the member:

(1) does not have the qualifications required by subsection (b)(1) of this section if the member is appointed as a professional inspector;

(2) cannot discharge the member's duties for a substantial part of the members term;

(3) is absent from more than half of the regularly scheduled commission meetings that the member is eligible to attend during each calendar year, unless the absence is excused by majority vote of the committee; or

(4) violates Texas Occupations Code, Chapter 1102.

(g) If the administrator of the commission has knowledge that a potential ground for removal exists, the administrator shall notify the presiding officer of the commission that the potential ground exists.

(h) The validity of an action of the committee is not affected by the fact that it is taken when a ground for removal of a committee member exists.

(i) The committee may meet at the call of a majority of its members. The committee shall meet at the call of the commission.

(j) [ ~~(b)~~ ] A quorum of the committee consists of five members.

(k) [ ~~(c)~~ ] The committee shall conduct its meetings in substantial compliance with Robert's Rules of Order.

(l) [ ~~(d)~~ ] The secretary of the committee, or in the secretary's absence, a member designated by the chairman, shall prepare written minutes of each meeting and submit the minutes to the committee for approval and for filing with the commission.

(m) [ ~~(e)~~ ] The committee shall submit semiannual reports to the commission on or before March 1 and September 1 of each year detailing the performance of the committee. The commission may require the report to be submitted on a form approved by the commission for that purpose. The committee may submit its written recommendations concerning the licensing and regulation of real estate inspectors to the commission at any time the committee deems appropriate. If the commission submits a [ ~~proposed~~ ] rule to the committee for development, the chairman of the committee or the chairman's designate shall report to the commission after each meeting at which the proposed rule is discussed on [ ~~a monthly basis with regard to~~ ] the committee's consideration of the rule.

(n) The committee is automatically abolished on September 1, 2019 unless the commission subsequently establishes a different date.

[ ~~(f)~~ Hearings before the committee concerning the licensing or discipline of real estate inspectors will be conducted in accordance with §535.221 of this title (relating to Proceedings before the Committee)].

§535.208.Application for a License.

(a) A person desiring to be licensed shall file an application using forms prescribed by the commission. Prior to filing an application for a real estate inspector license or for a professional inspector license, the applicant must pay the required fee for evaluation of the education completed by the person and must obtain a written response from the commission showing the applicant meets current education requirements for the license. The commission may require an applicant to furnish materials such as source outlines, syllabi, course descriptions or official transcripts to verify course content or credit. The commission may not accept an application for filing if the application is materially incomplete or the application is not accompanied by the appropriate fee. The commission may not issue a license unless the applicant:

(1) - (3) (No change.)

(4) provides all supporting documentation or information requested by the commission in connection with the application ; and

(5) submits proof of professional liability insurance as required by Chapter 1102 and §535.211 of this title (relating to Professional Liability Insurance).

(b) (No change.)

(c) The Texas Real Estate Commission adopts by reference the following forms approved by the commission. These forms are published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188:

(1) - (4) (No change.)

(5) Certificate of Insurance, Form REI 8-0 [ ~~Business License Application for Professional Inspector License by a Limited Liability Company or Corporation, Form REI 7-0~~ ].

(d) An application shall be considered void and subject to no further evaluation or processing when one of the following events occurs.

(1) - (3) (No change.)

(4) The applicant fails to submit the required proof of professional liability insurance within 60 days after the commission makes written request for proof of insurance.

(e) - (f) (No change.)

§535.210.Fees.

(a) The commission shall charge and collect the following fees:

(1) - (8) (No change.)

(9) a fee of $30 [ ~~$10~~ ] for transcript evaluation [ ~~filing an original application for a license as a professional inspector by a corporation or limited liability company~~ ];

~~[(10) ~~a fee of $5 for the annual renewal of the license of a professional inspector by a corporation or limited liability company;~~ ]~~

(10) [ ~~(11)~~ ] a fee of $20 for requesting issuance of a license because of a change of name, return to active status, or change in sponsoring professional inspector; and

(11) [ ~~(12)~~ ] a fee of $100 for deposit in the real estate inspection recovery fund upon an applicant's successful completion of an examination. [ ~~This fee does not apply to application for a license as a professional inspector by a corporation or limited liability company.~~ ]

(b) (No change.)

§535.211.Professional Liability Insurance.

(a) When an applicant for a license issued under Chapter 1102 has met all other licensing requirements, the commission shall notify the applicant that the applicant must provide proof of professional liability insurance before the license will be issued.

(b) An inspector must maintain professional liability insurance coverage during the period the license is active.

(c) The applicant must provide proof of insurance on Certificate of Insurance form REI 8-0 signed by the applicant's insurance agent.

(d) An inspector must notify the commission within 10 days of the cancellation or non-renewal of professional liability insurance coverage.

(e) An inspector must retain sufficient records of professional liability insurance coverage to document to the commission continuous coverage for the preceding two year license period.

§535.212.Education and Experience Requirements for an Inspector License.

(a) (No change.)

(b) Experience and additional education requirements.

(1) An applicant may substitute the following experience or additional education in lieu of the number of real estate inspections required by Chapter 1102, Texas Occupations Code and in lieu of the requirement that the applicant has previously been licensed for a specified time as an apprentice inspector or a real estate inspector:

(A) For a real estate inspector license, the applicant must have completed at least 30 additional hours of core real estate inspection courses acceptable to the commission, with at least 10 hours of credit each for the structural, mechanical (including appliances, plumbing, and HVAC components) and electrical systems found in improvements to real property . The [ ~~, or the~~ ] applicant must also provide documentation satisfactory to the commission to establish that the person has been licensed or registered at least three years as an architect, professional engineer, or engineer-in-training, or has at least five years of personal experience inspecting, installing, servicing, repairing or maintaining each of the structural, mechanical and electrical systems found in improvements to real property. Documentation of experience must include two reference letters from persons other than the applicant who have personal knowledge of the applicant's occupation and work.

[ ~~(B)~~ Prior to January 1, 2005, for a professional inspector license, the applicant must have completed at least 60 additional hours of core real estate inspection courses acceptable to the commission, with at least 20 hours of credit each for the structural, mechanical (including appliances, plumbing, and HVAC components) and electrical systems found in improvements to real property, or provide documentation satisfactory to the commission to establish that the person has been licensed or registered at least five years as an architect, professional engineer, or engineer-in-training, or has at least seven years of personal experience inspecting, installing, servicing, repairing or maintaining each of the structural, mechanical and electrical systems found in improvements to real property. Documentation of experience must be in verified form and from persons other than the applicant who have personal knowledge of the applicant's occupation and work. ]

(B) [ ~~(C)~~ ] For [ ~~Effective January 1, 2005, for~~ ] a professional inspector license, the applicant must have completed at least 320 additional hours of education acceptable to the commission. The additional 320 education hours must include 45 hours in Foundation Systems, 40 hours in Roof Systems, 45 hours in Framing, 40 hours in Electrical Systems, 40 hours in HVAC Systems, 40 hours in plumbing, 20 hours in Building Enclosure, 10 hours in Appliances, 15 hours in Standards of Practice/Legal/Ethics, 15 hours in Standard Report Form/Report Writing, and 10 hours of other approved courses . The applicant must also [ or ] provide documentation satisfactory to the commission to establish that the person has been licensed or registered at least five years as an architect, professional engineer, or engineer-in-training, or has at least seven years of personal experience inspecting, installing, servicing, repairing or maintaining each of the structural, mechanical and electrical systems found in improvements to real property. Documentation of experience must include two reference letters from persons other than the applicant who have personal knowledge of the applicant's occupation and work.

(2) (No change.)

§535.215.Inactive Inspector Status.

(a) For the purposes of this section, an "inactive" inspector is a licensed professional inspector, real estate inspector, or apprentice inspector who is not authorized by law to engage in the business of performing real estate inspections as defined by Texas Occupations Code, Chapter 1102, and who has been placed on inactive status by the commission for any of the following reasons:

(1) - (4) (No change.)

(5) the expiration, suspension, or revocation of the license of the inspector's sponsoring professional inspector ; [ . ]

(6) the failure of the licensee to provide to the commission proof of professional liability insurance; or

(7) the expiration or non-renewal of the inspector's professional liability insurance.

(b) - (f) (No change.)

§535.216.Renewal of License or Registration.

(a) A person licensed by the commission under Texas Occupations Code, Chapter 1102 (Chapter 1102), may renew the license by timely filing the prescribed application for renewal, paying the appropriate fee to the commission and satisfying applicable continuing education requirements as required by Chapter 1102, and by §535.218 of this title (relating to Continuing Education) , and providing to the commission proof of professional liability insurance with a minimum limit of $100,000 per occurrence as required by §535.211 of this title (relating to Professional Liability Insurance) and §1102.203, Texas Occupations Code .

(b) (No change.)

(c) A licensee also may renew an unexpired license by accessing the commission's Internet web site, entering the required information on the renewal application form, satisfying applicable education and professional liability insurance requirements and paying the appropriate fee in accordance with the instructions provided at the site by the commission.

(d) (No change.)

[ ~~(e)~~ The commission may not renew a license issued to a corporation or limited liability company unless the corporation or limited liability company has designated an officer, manager or employee who meets the requirements of Chapter 1102, Texas Occupations Code, including satisfaction of continuing education requirements. No person may act as designated officer, designated manager or designated employee if the person has failed to meet continuing education requirements. For the purpose of this section, continuing education requirements for the designated officer, designated manager or designated employee must be satisfied during the term of any individual professional inspector license held by the officer, manager or employee. ]

(e) [ ~~(f)~~ ] A renewal application is deemed filed when placed in the mail properly addressed to the commission with appropriate postage paid.

(f) [ ~~(g)~~ ] An inspector licensed on active status who timely files a renewal application together with the applicable fee , [ ~~and~~ ] evidence of completion of any required continuing education courses , and proof of professional liability insurance may continue to practice prior to receiving a new license certificate from the commission. If the license has expired and the licensee files an application to renew the license, the licensee may not practice until the new certificate is received.

§535.224. Practice and Procedure [ ~~Proceedings before the Committee~~ ].

[ ~~(a)~~ ~~The committee may be authorized by the commission to conduct administrative hearings or recommend the entry of final orders by the commission, or both, in contested cases regarding:~~ ]

[ ~~(1)~~ professional inspectors, real estate inspectors, or apprentice inspectors who are alleged to have violated a provision of Texas Occupations Code, Chapter 1102 (1102) or a rule of the commission;]

[ ~~(2)~~ persons whose applications for licensing as professional inspectors, real estate inspectors or as apprentice inspectors have been initially denied by the commission on a ground relating to the applicant's honesty, trustworthiness and integrity; and]

[ ~~(3)~~ professional inspectors, real estate inspectors, or apprentice inspectors who have been convicted of a criminal offence listed in §541.1 of this title (relating to Criminal Offense Guidelines).]

[ ~~(b)~~ If the committee determines after a hearing that disciplinary action is warranted, the committee may recommend that the commission issue a reprimand, or suspend or revoke a license. The committee may recommend that an order of suspension or revocation be probated in whole or in part by the commission or that the probation be subject to reasonable terms and conditions in the manner contemplated by Texas Occupations Code, Chapter 1101, §1101.656. The committee may recommend that the commission enter a final order denying a license or that a probationary license be issued in the manner contemplated by §535.91 of this title (relating to Hearing on Application Disapproval; Probationary License).]

(a) [ ~~(c)~~ ] Proceedings [ ~~before the committee~~ ] shall be conducted [ ~~by the committee~~ ] in the manner contemplated by §§533.31 - 533.39 [ ~~§§535.31 - 533.39~~ ] of this title (relating to Practice and Procedure) and with the Government Code, Chapter 2001, et[ . ] seq. [ ~~. The chairman of the committee or a member designated by the chairman shall act as presiding officer and may vote as any other member.~~ ]

(b) [ ~~(d)~~ ] In addition to the grounds for disciplinary action provided in Chapter 1102, a license of an inspector may be suspended or revoked by the commission if the inspector:

(1) fails to make good a check issued to the commission within 30 days after the commission had mailed a request for payment by certified mail to the inspector's last known business address as reflected by the commission's records;

(2) fails or refuses on demand to produce a document, book or record in his possession concerning a real estate inspection conducted by him for examination by the commission or its authorized agent; [ or ]

(3) fails within 10 days to provide information requested by the commission or its authorized agent in the course of an investigation of a complaint ; [ . ]

(4) fails to maintain professional liability insurance coverage during the period a license is active; or

(5) fails to notify the commission within 10 days of the cancellation or non-renewal of professional liability insurance coverage.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703576

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

22 TAC §535.209

(Editor's note: The text of the following section adopted for repeal on an emergency basis will not be published. The section may be examined in the offices of the Texas Real Estate Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Real Estate Commission (TREC) adopts on an emergency basis the repeal of §535.209 concerning Professional Inspector Corporations and Limited Liability Companies.

The repeal is adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapter 1102 enacted during the 80th Legislative Session, Regular Session, by House Bill 1530. As HB 1530 repealed the licensure requirements for corporations and limited liability companies that engage in home inspection services for a fee, the rules enacted under these provisions are repealed. The adoption of the emergency repeal permits TREC to comply with the effective date required by the bill. The effective date of HB 1530 is September 1, 2007.

The repeal is proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

The statutes affected by this emergency adoption are Texas Occupations Code, Chapter 1102 and House Bill 1530, 80th Legislature, R.S. No other statute, code or article is affected by the adopted amendments.

§535.209.Professional Inspector Corporations and Limited Liability Companies.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703568

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900

Chapter 539. PROVISIONS OF THE RESIDENTIAL SERVICE COMPANY ACT

Subchapter O. ADMINISTRATIVE PENALTIES

22 TAC §539.140

The Texas Real Estate Commission (TREC) adopts on an emergency basis new Chapter O concerning Administrative Penalties including new §539.140 concerning Schedule of Administrative Penalties. The new subchapter and rule are adopted on an emergency basis to comply with new legislation that included revisions to Texas Occupations Code Chapter 1303 enacted during the 80th Legislative Session, Regular Session, by Senate Bill 914. The effective date of SB 914 is September 1, 2007. The adoption of the new subchapter and rule permits TREC to comply with the effective date required by the bills.

The new subchapter and rules provide a schedule of administrative penalties to be assessed for violations of the Residential Service Company Act depending on the severity of the violation and other factors detailed in the rules.

The emergency new subchapter and rule are adopted under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary to implement Chapter 1303.

The statute affected by this emergency adoption is Texas Occupations Code, Chapter 1303 and Senate Bill 914 80th Legislature, R.S. No other statute, code or article is affected by the adopted amendments.

§539.140.Schedule of Administrative Penalties.

(a) The administrative penalties set forth in this section take into consideration all of the criteria listed in §1303.355(c) of the Texas Occupations Code.

(b) An administrative penalty range of $100 - $1,500 per violation per day may be assessed for violations of the following sections of the Texas Occupations and Administrative Codes:

(1) 22 TAC §539.137(b);

(2) §1303.202(a);

(3) §1303.202(b);

(4) §1303.052; and

(5) §1303.352(a)(1).

(c) An administrative penalty range of $500 - $5,000 per violation per day may be assessed for the following violations of the Texas Occupations and Administrative Codes:

(1) §1303.101;

(2) §1303.151;

(3) 22 TAC §539.81;

(4) §1303.153;

(5) §1303.352(a)(2);

(6) §1303.352(a)(3); and

(7) §1303.352(6).

(d) The commission may assess an additional administrative penalty of up to two times that assessed under subsections (a), (b) and (c) of this section if the residential service company has a history of previous violations.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 13, 2007.

TRD-200703577

Loretta DeHay

Interim Administrator and General Counsel

Texas Real Estate Commission

Effective Date: September 1, 2007

Expiration Date: December 29, 2007

For further information, please call: (512) 465-3900